Challenges for NZ Official Development Assistance

Speech to the Council for International
Development Annual General Meeting

Royal Society House,
Turnbull Street, Wellington

Saturday 25 August 2001;
9.15am

I am pleased to be, for a second time, invited
to address the annual meeting of the representative body of
development non-government organisations in New
Zealand.

Introduction

New Zealand has a unique
opportunity today to become a leader in development thinking
and practice.

The comparatively small size of our aid
programme is no barrier to this.

I believe the following
weeks will mark the beginning of a new era in aid delivery
and the philosophy behind aid in New Zealand, and I am
excited as Minister to be a part of that.

The 1990s will
be remembered as the decade when "aid fatigue" became a
cliché all around the world.

A decade in which New
Zealand's aid programme developed in a somewhat ad hoc way.

I am proud, as the Minister responsible for overseas
development, that is about to change. And I am not just
talking about rearranging the deck chairs.

Aid
review

Last September, I commissioned a review of New
Zealand's Official Development Assistance – our ODA –
programme. This initiative was foreshadowed in the party
manifestos of both coalition partners in the government -
the Labour Party and the Alliance.

Both parties saw that
serious regression during the 1990s in several Pacific
Island countries demanded a reassessment of New Zealand's
aid policy.

Two development-aid professionals, Joseph
Grossman and Annette Lees, selected with assistance from
MFAT, conducted the review. Their final report, Towards
Excellence in Aid Delivery, has been completed. And it is
an excellent report.

Phil Goff and I, and officials from
MFAT, the Treasury and the State Services Commission, have
given it careful and detailed consideration since then.

I
find that the report reflects best practice in development
assistance. It takes into account mainstream thinking
amongst like-minded overseas aid donors. It recognises the
unique nature of poverty in the Pacific.

The consultants
drew from recent development literature and experiences of
other countries. They looked especially at the United
Kingdom and Australia, which have recently undertaken
similar reviews.

They held a number of two-day meetings
with stakeholders in main centres around New Zealand. They
visited six Pacific Island countries, and they met with aid
officials in Australia.

They talked with MFAT employees at
home and abroad.

Their report draws on the views of all of
those most actively involved in the design and delivery of
New Zealand's ODA.

It stimulated forward thinking in
MFAT. There's no doubt about that. And it has captured
work in progress as the Ministry adapts to the requirements
of the Labour/Alliance coalition.

You will find, too,
when the report is released, which will be soon, that it
also reflects their discussions with people like you –
representatives of non-governmental aid organisations.

It is a work of professional integrity. Although
forthright - it tells it like it is - it is balanced. It is
a report that will help us move forward.

Accountability

$226 million dollars is a lot of money
for the New Zealand tax payer to give, but when compared to
the aid budget of other bigger countries, it is
modest.

For both those reasons we must ensure that we
achieve maximum returns for our investment.

We must – all
of us – ask the questions: 'why do we do what we do?' - and
– 'what is the impact?'

As many of you here will be aware,
there have been a wide range of mini-reviews of various
aspects of New Zealand aid and MFAT over the past ten
years.

Each of these has been undertaken with its own
scope and methodology. Each has come to its own
conclusion.

But they all share a common theme – that
change is needed if we are to get the best value for money
from our aid dollar.

Why do we give aid?

So why do
we give aid?

A recent survey of public opinion showed
that there was a high level of support for
government-provided aid.

71% of those surveyed supported
the giving of aid – for humanitarian reasons. And that
makes sense.

In our own region for example, we know that
if our development aid can contribute to poverty
alleviation, and good governance –

 We increase
not only the well-being of people in the Pacific,
 We increase security in the region, and
therefore our own security in New Zealand. We
increase our ability to control environmental damage,
 And protect the marine
resources And we increase our chances of
preventing the spread of diseases.

Developed countries
like New Zealand benefit from a more prosperous
region.

Our $226 million dollars can help achieve
that.

This mutual dependency – between the giver of aid
and the receiver - will become even more important in the
next 25 years as 2 billion people will be added to the
world's population, 97% of them in developing
countries.

Even more reason for us to ensure that
globalisation becomes a positive force for all the world's
people.

Foreign policy

Development cooperation is one of
the three pillars of New Zealand's foreign policy.

That
was not always so.

But in the last fifty years,
development cooperation has stood alongside defence and
economic matters as part of foreign policy.

Today we must
ask: are the necessary goals of foreign affairs and trade
compatible with the necessary goals of aid and
development?

Should aid be an instrument of foreign
policy?

These are the sorts of issues that we as a
government are now working on.

Value for money

There is
also, as I said earlier, the issue of
accountability.

Traditionally, too much government
spending has been based simply on the previous year's level
of expenditure. I'll give you an example.

Last year's
appropriation for ODA was $226.527 million. Estimated
actual expenditure is within fifty or so thousand dollars of
that figure. That tells Parliament, which is supposed to
scrutinise these figures, a lot about the skills of our
accountants and managers.

It tells us where our aid
dollar is going, but not whether it is effectively used.

Sometimes, New Zealand aid may be most effectively
delivered through multi-lateral channels, where delivery and
accountability mechanisms are already in place. An example
is the $US500 million trust fund proposed by Dr Jacques
Diouf, the Director-General of the UN Food and Agriculture
Organisation, to combat hunger and secure the food supply in
developing countries.

But what about our bilateral
aid? Are New Zealand's bilateral programmes and projects
effective? Are they achieving sustainable long-term
objectives? The truth is, we don't always know.

This
year, exactly the same amount has been appropriated for ODA
as last year. But I have to tell you that the criteria for
determining whether this is a sound decision are still not
well developed.

We need to put more resources into
monitoring and evaluating the impact of our aid
interventions.

Only that way can we learn the lessons,
and apply that learning to the future.

Accountability
also means getting countries off aid.

Some South Pacific
nations are among the most aid-dependent countries in the
world with aid to GDP ratios as high as 47% in Kiribati, 38%
in Marshalls and 29% in Samoa.

Even when long term aid is
essential, countries should be looking for opportunities to
increase their self-reliance.

One of the reforms that I
hope you will be hearing about in the next few weeks is what
the Government will be doing to put more useful
accountability criteria in place.

Aid as a political
lever

Development cooperation since World War II has often
had a political edge.

Cold War thinking shaped New
Zealand's overseas aid policy over many years. Britain and
the United States determined the global agenda in which New
Zealand played its part.

Public opinion in New Zealand was
discounted. The Government extended both development aid
and military support to various repressive regimes,
including that in South Vietnam.

For thirty years,
New Zealand joined with others in backing the Suharto
government in Indonesia – and was part of that support - and
ignored the cry of the people of East Timor.

Official
policy was for New Zealand to concentrate aid resources on
parts of South East Asia that were near to the interface
with the communist block, but policy quite overlooked
developmental needs closer to home, in
Melanesia.

Politics, not need, was the criterion.
Development cooperation was available to partners chosen on
the basis of political expediency.

But I do want to
emphasise, that from the very beginning, within the
prevailing policy framework, many individual New Zealanders,
volunteers, NGO personnel and officials alike, showed
resourcefulness and dedication in contributing to our aid
programme.

Needs close to home

In the last couple of
months I’ve had the opportunity to visit Vanuatu and the
Cook Islands and see at first hand some of the developmental
challenges facing those societies.

And different societies
they are, with the Cooks rather better off, connected
intimately to New Zealand as it is.

But even in the Cook
Islands, there are limitations on basic-level education and
teaching standards. There is an absence of
income-generating opportunities especially on the outer
islands. There are problems of domestic violence.

All
of these present challenges to a society which is being
depleted by emigration. And Vanuatu has all the same
challenges except the last, exacerbated by greater absolute
poverty.

Put these two peaceful societies alongside
Bougainville, Solomon Islands and East Timor, where violent
disruption has stretched the fabric of government and civil
society to breaking point.

In these places conventional
developmental approaches give way to problems of an entirely
different order, the problems of crisis management and
post-crisis social and political reconstruction.

Education: are we spending the money wisely?

Education
is a good example to look at how we can do things
better.

It's an area that has been specifically addressed
in the aid review. 40% of our bilateral aid is directed at
education.

90% of that has gone to tertiary education -
the majority (85%) provided in New Zealand.

But many of
these students do not return to their own countries. In the
meantime, too many people in those developing countries
still lack a basic education.

Should we re-direct aid into
basic education, as Oxfam recommended in a recent report, or
is there a case for continued capacity-building at the
tertiary level where partner societies are often unable to
train there citizens? What are other donors doing? What
does the partner government want?

All these factors have
to be weighed up by this government, and we will be doing
this in the next few months as part of the 2002-2003 budget
round.

Regression in the Pacific area

The failures
where they exist (and of course there are success stories
too) are failures of policy.

 I see the collapse
of local communities that had long been self-sufficient.
 I see urban drift at a pace faster than many of
the growing towns in the Pacific can handle.  I
see a brain drain from the Pacific that is alarming.
 I see examples of socio-economic regression at
the national level.

In some cases these failures have
happened because there has been a conflict of interests:
trade cooperation and investment opportunities have been
forced into an arranged marriage with development
cooperation.

Short-term project targets may have been
achieved, but some of the longer-term outcomes do not, by
any standards, reflect value for money with regard to the
aid dollars we have spent.

Our special relationship with
the Cook Islands, Niue and Tokelau

Even in places where
New Zealand is uniquely well placed to make a difference
through well-targeted development cooperation, the outcome
has not been what was intended.

The Cook Islands, Niue and
Tokelau all have a special constitutional relationship with
New Zealand. Successive New Zealand Governments have all
wanted to see that these three groups of people remain
politically distinct entities.

And over the years, New
Zealand has extended substantial budgetary support and
project aid with this outcome in mind.

We now have to
question whether this is the right strategy. We have to
reconsider, in the light of experience, whether that
political objective is a realistic objective.

The Cook
Islands, Niue and Tokelau are small enough, and their ties
with us are close enough, for New Zealand to have real
impact.

They should have become examples of successful
development cooperation relationships. Judging by the
response of so many of the people who were living there, we
have failed.

The preferred choice of the majority of the
people of the Cook Islands, Niue and Tokelau has been to
emigrate.

What does that tell me about our aid? New
Zealand has been spending around $2000 per person, annually,
in Niue and Tokelau. Many of the people who have emigrated
tell me that the money has not been well spent.

The fact
that so many people born in our former island territories
have chosen to come to New Zealand shows that they see
nothing inherently wrong with New Zealand's way of doing
things.

But I see it as a negative indicator of what the
New Zealand Government has been able to achieve in
partnership with those governments. New Zealand planners'
assumptions about people's motivation, and about local
social relations, have too often been wide of the
mark.

Focus on the Pacific

If we are to get more bangs
for our bucks, we must question if we are in fact giving aid
to too many countries.

New Zealand has 63 bilateral
funding relationships - 19 are with major bilateral partners
- including 11 in the Pacific. Other sectoral and thematic
funds and schemes, for example through the Commonwealth
Secretariat, extend our reach to a total of 92
countries.

In 15 years we have nearly doubled the number
of countries we give aid to.

New Zealand has a vital role
to play in the Pacific. We are the largest donor in some
parts of Polynesia.

And the Pacific – which for this
purpose I might define as extending far enough west to
include East Timor – will remain our core focus
geographically.

Our geographical situation sets us apart
from aid donors such as Denmark, Ireland, the Netherlands
and Sweden.

In our case, the areas of need are close at
hand, and the political complexities and expectations of
neighbours impinge much more directly on New Zealand than,
for example, the expectations of the people of Botswana
impinge on Sweden.

Strengthening partnerships

Being
small has led us to develop some particular strengths over
time. One is building capacity, rather than building
buildings. We can’t provide the resources for large scale
infrastructure projects nor for large scale institution
building. But we can and do provide technical assistance in
niche areas.

This places a premium on two things:
specialising and second, harmonising and coordinating with
other donors to ensure we’re part of the overall
solution.

Of course, providing aid is a partnership
between, on the on hand, our resources and people, and on
the other hand, the aid needs and requirements of our
partner governments and societies. We cannot and should not
dictate.

We do need to consult closely, and to evaluate
our partners' needs against our capabilities, before
deciding on what’s best.

Being small, New Zealand can get
down to the right scale, to the people-to-people level, and
interact effectively. Very often these days we do that via
NGOs and volunteer organisations because of their
on-the-ground effectiveness.

Relations between MFAT
officials and the NGO sector are extensive and soundly
based. Earlier this year the Prime Minister launched a
Strategic Policy Framework for the relationship, a first for
any government department.

A new direction

So there it
is. This Labour/Alliance Coalition Government is committed
to placing our stamp on the delivery of New Zealand's ODA.
Both parties promised, before the last election, to
re-assess our overseas aid, and the review has now been
completed.

We must ensure, on behalf of all New
Zealanders, that we are getting value for money.

That
means having clear, focused goals for aid and development
that prioritise poverty alleviation, regional development
and security, and tackling aid dependency.

Achieving a
higher level of development expertise

It also means having
the best, most professional staff for the job.

The review
raises a valid issue that we will have to examine in the
coming months. Does the rotational staffing system used by
MFAT suit the needs of ODA delivery?

There is a valid need
to rotate MFAT staff in posts across the world and at home.
But if we are to have the most professional staff on the job
in aid, with stability and accountability, it may be more
appropriate to have greater staff continuity in this
area.

Development assistance is a profession with its own
academia, literature, field experience, history and
management approach. I want a highly qualified aid agency,
staffed with the best and most experienced people available.
Depth of experience in development cooperation is vital. We
can have that in New Zealand.

In the past our ODA
undoubtedly gave us access, and raised our national profile,
in places where New Zealand had previously been unnoticed.

Be that as it may, there are now strong arguments in
favour of sharpening up the professionalism and the focus of
New Zealand's development program.

A centre-left
government does not have the same agenda as the last
government. That means we do not look at the developing
world – and our South Pacific neighbourhood in particular –
in the same way as our predecessors did. People expect us
to do things differently, and that is why they voted for us
in November 1999.

Targeting poverty

The Alliance
election manifesto spoke of special emphasis on aid for the
elimination of poverty, and I will conclude with an
elaboration on that point. Targeting poverty is essential
if development is to be sustainable. Unless the poor are
included, development will not be sustainable.

Poverty is more than material destitution. People are
entitled to lead long and healthy lives. They are entitled
to be knowledgeable. They are entitled to have access to
the resources necessary for a decent standard of
living.

In our own Pacific region, poverty raises issues
of vulnerability and opportunity. This includes lack of
education, poor health, lack of economic assets, social
exclusion and political marginalisation. It can lead to
frustration and apathy. Like all forms of poverty, it can
result in despair and violence.

Regional security in the
South Pacific must be based on a growing sense of collective
responsibility and support amongst all the peoples of the
region. Regional security will grow as we develop greater
mutual respect. I get that feeling very strongly at
festivals of Pacific arts and culture. They are a
celebration of so much that is good.

I am not announcing
decisions on New Zealand's development today, but I am
setting the stage for an announcement that the Government is
planning to make early in September.

We are on the point
of restructuring the delivery of our development cooperation
to promote real security and development within our own
region.

I am proud to be a part of that, and a part of a
process which I hope will make your jobs all the more
fulfilling, because I have no doubt that the work that you
do, and the support we can give in government, are vital to
the development and security of our
region.

In response to the challenges facing Scoop and the media industry we’ve instituted an Ethical Paywall to keep the news freely available to the public.
People who use Scoop for work need to be licensed through a ScoopPro subscription under this model, they also get access to exclusive news tools.

To ordinary wage and salary earners who (a) watch a slice of their gross income being taxed every week via PAYE and who also (b) pay GST on every single thing they buy, there has been something quite surreal about the centre-right’s angry and anguished reactions to the Tax Working Group’s final report... More>>

ALSO:

The New Zealand Infrastructure Commission – Te Waihanga – will be established as an Autonomous Crown Entity to carry out two broad functions – strategy and planning and procurement and delivery support. More>>

A single motel which charges up to $1,500 per week per room has received over $3 million worth of Government funds to provide emergency assistance, despite never having a Code Compliance Certificate – an offence under the Building Act – and receiving a series of longstanding complaints from occupants... More>>

“Tenure review has resulted in parcels of land being added to the conservation estate, but it has also resulted in more intensive farming and subdivision on the 353,000 ha of land which has been freeholded. This contributed to major landscape change and loss of habitat for native plants and animals,” said Eugenie Sage. More>>